Federal Communications Commission DA 14-815
Before the
Federal Communications Commission
Washington, DC 20554
In the Matter of )
)
Request for Waiver and Review of a )
Decision of the )
Universal Service Administrator by )
)
West Oso Independent School District ) File No. SLD- 858082
Corpus Christi, TX )
)
Schools and Libraries Universal Service ) CC Docket No. 02-6
Support Mechanism )
ORDER
Adopted: June 12, 2014 Released: June 12, 2014
By the Acting Chief, Telecommunications Access Policy Division, Wireline Competition Bureau:
1. Consistent with precedent,1 we deny a request from West Oso Independent School District
(West Oso)2 seeking review of a decision made by the Universal Service Administrative Company
(USAC) under the E-rate program (more formally known as the schools and libraries universal service
support program).3 In its decision, USAC determined that West Oso violated the Commission’s
competitive bidding rules by failing to use price as the primary factor in its vendor selection process.4
1 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776,
9029, para. 481 (1997) (Universal Service First Report and Order) (subsequent history omitted) (stating that price
must be the primary factor in selecting the winning bid); Request for Review of the Decision of the Universal Service
Administrator by Ysleta Independent School District et al.; Schools and Libraries Universal Service Support
Mechanism, CC Docket Nos. 96-45, 97-21, Order, 18 FCC Rcd 26407, 26429, para. 50 (2003) (Ysleta Order)
(stating that when evaluating bids, the “cost category” must be given more weight than any other single factor);
Request for Review of a Decision of the Universal Service Administrator by Henrico County School District;
Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, Order, 28 FCC Rcd 6277
(Wireline Comp. Bur. 2013) (Henrico Order) (Application for Review pending) (stating that Henrico’s ability to
find a way to re-engineer its competitive bidding process after the conclusion of that process, to reach its desired
result, does not demonstrate compliance with the Commission’s competitive bidding rules). See also 47 C.F.R. §§
54.503, 54.511 (requiring applicants to use price as the primary factor in the vendor selection process).
2 See Letter from Kevin Witte, E-rate Consulting Personal E-rate Partner, on behalf of West Oso Independent School
District, to Marlene H. Dortch, Secretary, Federal Communications Commission, CC Docket No. 02-6 (filed July
10, 2013) (Request for Waiver) (regarding funding year 2012 FCC Form 471 application number 858082 (funding
request number (FRN) 2334699)).
3 Section 54.719(c) of the Commission’s rules provides that any person aggrieved by an action taken by a division of
USAC may seek review from the Commission. 47 C.F.R. § 54.719(c).
4 See Letter from USAC, Schools and Libraries Division, to Rhonda Scholwinski, West Oso Independent School
District (dated Apr. 30, 2013) (regarding funding year 2012 FCC Form 471 application number 858082 (FRN
2334699). See also 47 C.F.R. §§ 54.503, 54.511.
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Based on our review of the record, we agree with USAC’s determination and find that West Oso violated
the Commission’s competitive bidding rules.5
2. Under the E-rate program, eligible schools, libraries, and consortia that include eligible
schools and libraries may apply for discounts for eligible services.6 The Commission’s rules provide that
these entities must seek competitive bids for all services eligible for support.7 Applicants must submit for
posting on USAC’s website an FCC Form 470 requesting discounts for E-rate eligible services or any
services for which the applicant is seeking a new contract.8 The Commission’s rules require applicants to
carefully consider all submitted bids prior to entering into a contract, and that the price of eligible
products and services must the primary factor in selecting the winning bid.9 Applicants may also consider
relevant factors other than the pre-discount prices submitted by providers, such as prior experience,
personnel qualifications, management capability, and environmental objectives.10 When evaluating bids,
however, applicants must have a separate “cost category” and that category must be given more weight
than any other single factor.11
3. After reviewing the record, we find that USAC correctly denied West Oso’s request for
support.12 Specifically, we find that West Oso failed to comply with the Commission’s competitive
bidding requirements for FRN 2334699, because it did not assign the highest weight to price as required
by the Commission’s rules in its vendor selection process.13 The record shows that West Oso considered
five criteria in its vendor evaluation process: (1) “price/charges” (representing 25 percent of the total
evaluation weighting); (2) “understanding of needs” (representing 25 percent of the total evaluation
weighting); (3) “prior experience” (representing 20 percent of the total evaluation weighting); (4)
“personal qualifications” (representing 20 percent of the total evaluation weighting); and (5) “support”
(representing 10 percent of the total evaluation weighting).14
4. In its appeal, West Oso argues that a waiver of the Commission’s competitive bidding
requirements is justified because, if it had re-assigned the point value to its evaluation criteria using a
weight of 40 percent for price/charges, 20 percent for understanding of needs, 15 percent for prior
experience and personal qualifications, and 10 percent for support, the same vendor would have been
5 See 47 C.F.R. §§ 54.503, 54.511.
6 See 47 C.F.R. §§ 54.501-54.502.
7 See 47 C.F.R. § 54.503.
8 Id. See also Schools and Libraries Universal Service, Description of Services Requested and Certification Form,
OMB 3060-0806 (October 2004) (FCC Form 470).
9 See 47 C.F.R. §§ 54.503, 54.511. See also Universal Service First Report and Order, 12 FCC Rcd at 9029, para.
481; Ysleta Order, 18 FCC Rcd at 26429, para. 50.
10 Universal Service First Report and Order, 12 FCC Rcd at 9029-30, para. 481. See also 47 C.F.R. § 54.511.
11 See Ysleta Order, 18 FCC Rcd at 26429, para. 50. For example, if an applicant assigns 10 points to reputation and
10 points to past experience, the applicant would be required to assign at least 11 points to price. Id. at n.138.
12 The Bureau must conduct a de novo review of requests for review of decisions issued by USAC. 47 C.F.R. §
54.723.
13 See 47 C.F.R. §§ 54.503, 54.511.
14 See Email from Kevin Witte, E-rate Consulting Personal E-rate Partner, on behalf of West Oso Independent
School District, to Dhara Patel, USAC, Schools and Libraries Division (dated Nov. 5, 2012) (Response to Selective
Review Information Request).
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selected to provide the services at issue.15 We are not persuaded by this argument. As we recently found
in the Henrico Order, the fact that West Oso can, with the benefit of hindsight, re-assign point values to
its evaluation criteria to reach an identical result using price as the primary factor does not demonstrate
compliance with the Commission’s rules.16 Similarly, in this instance, there is no way to know what
weight West Oso would have assigned to price, if it had properly assigned the greatest weight to price in
its bid evaluation process, nor is there a way to know what weight it would have then assigned to the
other criteria. As a result, there is no way to know whether West Oso would have reached the same
outcome.
5. We note that, on occasion, we have waived the Commission’s rules17 for applicants that
failed to use price as the primary factor in its vendor evaluation process, but selected the lowest-cost
provider.18 In this case, however, the record shows that the winning vendor’s cost proposal received the
same score in the price category as another vendor, and thus it is unclear whether West Oso selected the
lowest-cost provider.19 Moreover, unlike the circumstances presented in the Midlothian Order, West Oso
did not argue that it selected the lowest-cost vendor in its appeal.20 We therefore find that West Oso
failed to comply with the Commission’s rules to assign the highest weight to price when evaluating bids
and that there is no justification for a waiver of those rules.21 As the Commission has previously
indicated, we are deeply concerned about practices that undermine the framework of the competitive
bidding process.22 When an applicant constructs a bid evaluation process that circumvents the
15 See Request for Waiver (citing Request for Review of a Decision of the Universal Service Administrator by
Midlothian School District 143; Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6,
Order, 28 FCC Rcd 8970 (Wireline Comp. Bur. 2013) (Midlothian Order) (finding that a waiver of the
Commission’s competitive bidding requirements was in the public interest because, despite the ambiguity as to
whether Midlothian assigned the highest weight or value to price in its vendor evaluation process, it ultimately
selected the least expensive service offering)); Response to Selective Review Information Request.
16 See Henrico Order.
17 Generally, the Commission’s rules may be waived if good cause is shown. 47 C.F.R. § 1.3. The Commission
may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the
public interest. Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (Northeast
Cellular). In addition, the Commission may take into account considerations of hardship, equity, or more effective
implementation of overall policy on an individual basis. WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir.
1969); Northeast Cellular, 897 F.2d at 1166. Waiver of the Commission’s rules is appropriate only if both (i)
special circumstances warrant a deviation from the general rule, and (ii) such deviation will serve the public interest.
Northeast Cellular, 897 F.2d at 1166.
18 See, e.g., Midlothian Order; Request for Review of Decisions of the Universal Service Administrator by Allendale
County School District et al.; Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6,
Order, 26 FCC Rcd 6109 (Wireline Comp. Bur. 2011) (finding that a waiver of the Commission’s competitive
bidding rules was in the public interest where the petitioners did not assign the highest weight to price when
evaluating bids, but ultimately selected the vendor with the least expensive service offering). We stress that, under
the Commission’s rules, applicants need not select the lowest-priced service provider, but must assign the greatest
weight to price when evaluating competing bids. See 47 C.F.R. §§ 54.503, 54.511; Ysleta Order, 18 FCC Rcd at
26429, para. 50.
19 See Request for Waiver; Response to Selective Review Information Request.
20 See Midlothian Order.
21 See 47 C.F.R. §§ 54.503, 54.511.
22 See Universal Service First Report and Order, 12 FCC Rcd at 9076-80, paras. 570-80 (requiring applicants to
conduct a fair and open competitive bidding process when seeking support for eligible products and services);
Federal-State Joint Board on Universal Service; Access Charge Reform; Price Cap Performance Review for Local
Exchange Carriers; Transport Rate Structure and Pricing; End User Common Line Charge, CC Docket Nos. 96-45,
96-262, 94-1, 91-213, and 95-72, Report and Order and Fourth Order on Reconsideration, 13 FCC Rcd 5318, 5425-
(continued…)
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Commission’s competitive bidding requirements, the applicant suppresses fair and open competitive
bidding and ultimately damages the integrity of the program.
6. ACCORDINGLY, IT IS ORDERED, pursuant to the authority contained in sections 1-4
and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151-154 and 254, and sections
0.91, 0.291, 1.3 and 54.722(a) of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, 1.3 and 54.722(a),
that the Request for Waiver filed by West Oso Independent School District IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Vickie S. Robinson
Acting Chief
Telecommunications Access Policy Division
Wireline Competition Bureau
(Continued from previous page)
26, para. 185 (1997) (stating that competitive bidding is a key component of the Commission’s effort to ensure that
universal service funds support services that satisfy the precise needs of an institution, and that the services are
provided at the lowest possible rates).